Study 6 - Property Insurance - Key Terms

Question 1

exclusion

Answer 1

Risks, perils, or properties defined in the policy as not covered.

Question 2

endorsement

Answer 2

An amendment added to a written document, particularly an agreement between parties, altering its provisions.

Question 3

material change

Answer 3

Those changes that would influence a reasonable and prudent insurer to decide whether to stay on the risk or influence the terms on which the risk is retained. The general context of this condition can, however, encompass a wide range of possible changes.

Question 4

common hazard

Answer 4

A hazard that is generally found in most occupancies. Heating, lighting, and housekeeping are examples of hazards common to most occupancies.

Question 5

fire insurance

Answer 5

Coverage for losses from fire, lightning, and limited explosion and also the resultant damage caused by smoke and water. Usually supplemented by extended converge insurance.

Question 6

fire

Answer 6

Combustion manifested in light, flame, and heat for useful purposes (friendly fire) or destructive purposes (hostile fire).

Question 7

condominium

Answer 7

Individual ownership of a single unit in a multi-unit building or group of buildings, including a percentage interest in the part of the total property owned jointly by all unit owners. Condominium property requires special insurance treatment.

Question 8

mobile home

Answer 8

Manufactured housing, commonly called house trailers, usually placed in one location and left there permanently, but retaining the ability to be moved, as required in many areas. Behind the cosmetic work fitted at installation to hide the base, there are strong trailer frames, axles, wheels, and tow-hitches.

Question 9

subrogation

Answer 9

Legal process by which an insurance company, after the payment of a loss, is assigned the rights of the insured to recover the amount of the loss from those who are legally liable for it.

Question 10

replacement cost clause

Answer 10

A provision, generally in property insurance coverage, to provide a substitute of the damaged or loss property with something similar, including having the same use but not necessarily identical to the property being replaced, without extra cost to the insured.

Question 11

guaranteed replacement cost

Answer 11

A clause that pays replacement cost even if these exceed the amount of insurance on the dwelling building if all conditions are met.